Reinvention Isn’t Easy

S. Schuchart

Summary Bullets:

  • Technology company employees need to enable reinvention, even if it will diminish their current product line.
  • Buyers can and should scrutinize how a technology vendor handles reinvention due to technological or economic change.

Companies in the technology space often talk about reinvention, a renaissance in which the company will not only take a bold new stance, but also produce a new product or service that will rapidly become the majority of their business. Some companies have even done it and are held in the highest esteem. The best example of that would be Apple, which went from virtually moribund in the 1990s to a powerhouse in the early 2000s.

The hardest part of any reinvention comes from the inside. Companies that fail at reinvention often do so because of internal resistance and meet-us-half-way compromises. At base, it is a failure in understanding the very human factors at work within the company culture.

When a company has a successful product line, the natural instinct is to continue incrementally improving that product over time to make it better. But often there will be new technologies, approaches, and trends which threaten that flagship product line. It could be something like a shift to software, a move to cloud, or a new approach that obsoletes the old product line.

The natural instinct of the people in charge of the successful product line is to protect it. So when another project is initiated to address the new circumstances, often internal politics, compromises, and worries of revenue cannibalization will destroy or hamstring the new product line. The company looks old, stuck in its ways, a dinosaur that the industry has passed up – unable to innovate, despite top-flight talent.

How could this happen? Everyone has the company’s best interests at heart, but human nature rules. People are territorial, and when they have success, they resist anything which diminishes that success. It becomes depressingly tribal. A maniacally ruthless, driven, and canny leader *can* push past these human nature problems by sheer force of will. Steven Jobs is a great example of that. But the number of leaders who can realistically do so is vanishingly small, and it is an incredibly difficult thing to replicate. Leaders can’t *just* rule with an iron fist; it’s far more than that.

This is why so many companies buy and invest in startups. Startups can grow, free of internal politics and sales considerations. When the product is ready and there are public companies, the startup can be snatched up and established as another product line. Often the CEO of the startup is named head of product development, to ensure the new company direction stays on track and prevent brain drain. This also keeps the internal company culture from tearing itself apart, although acquisitions – if mishandled – can be disastrous for company culture.

Executives need to take the human nature factors into account and address them not with the iron fist, but with clear, concise communication done frequently. The executive team has to all be on the same page, understanding that there may be temporary revenue issues while the reinvention takes hold. Mostly, they have to be resolute and not compromise or hedge if they really want to reinvent the business.

Employees at technology vendors should keep all of this in mind when looking at company direction. Are you, as an individual contributor, line manager, or executive, just defending your turf, or are you really interested in returning your company to high growth? It’s extremely hard to see that big picture when you are on the inside, and even more so when your job might be to manage a product line that will lose its flagship status.

Buyers, when evaluating technology companies, take a look at how they are managing reinvention. Are they just adding layers of glitter and new branding to their flagship product lines, selling incrementalism as reinvention? Are they frenetically acquiring startups, some of which don’t make much sense, in a desperate bid to remain relevant? Or do the acquisitions look strategic? How have past acquisitions gone? The nature and future of your relationship with this technology company can and should be influenced by how well they manage transitions, both technological and economic.

What do you think?

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